After a recent announcement from Apple; Netflix, Hulu and Amazon should be worried that Apple is finally making a serious effort to get into the original content space. Based on a new suggestion in a Variety report, it’s believed that Apple could be spending roughly $4.2 billion for creating its own original content in the next four years by 2022. This is a big jump from the previous $500 million budget.
In the past, Apple has made some half-hearted attempts to get into the original content space, both with content itself and even hardware like the Apple TV. But with this new report it’s said that Apple plans to spend an estimated $1 billion on original content per year. Compared to Netflix this is still a small number as a recent CNBC article had suggested that Reed Hastings Netflix’s Cofounder and CEO has expected to spend over $7 billion in 2018. While it’s been reported that Amazon spends roughly $8 billion a year on original content.
Apple’s New Strategy
For Apple to be able to compete with companies that have such large spending budgets, it’s been said that it’s planning to package it’s Apple Music with the original content to create something of a similar product offering from Amazon with Amazon Instant Video and Amazon Music that can be found in Amazon Prime.
Apple already has roughly 30 million subscribers for Apple Music, which is a very large number for a subscription service. Converting only 50% of that base will make Apple jump over someone like Hulu who only has somewhere around 13-15 million subscribers. It should be noted that Apple subscribers already pay about $10 per month for this service. So either a small increase in pricing or a bundle deal for both music and video content will be a no brainer for consumers. This can have decent impact on Apple’s revenue numbers as it’s trying to diversify away from a dependence on sales of the iPhone and start to build out a subscription service arm business.
Lots Of Original Content In The Work For Apple
Apple has already been testing out new original content with shows like “Planet of the Apps” and “Carpool Karaoke” that seems to be getting a decent response from viewers of these shows. It’s important to remember that several months back in June Apple made some big hires.
Big name studio figures from Sony Pictures have been brought over to help with Apple’s transition into original content. They had previously managed shows like Breaking Bad that run for 5 seasons and won 145 awards with 225 nominations over that period. The former Sony heads have a great understanding of the industry and will use these large fund of money to expand Apple into original content quickly and effectively.
Apple has already started working with legendary people like Steven Spielberg. It’s been said that his production company, Amblin Entertainment will producing about10 episodes for an estimated budget of $5 per episode for Amazing Stories.
With so many people cutting the cord and switching to using a a la carte video option. Apple has several key factors as an advantage. First it’s ecosystem makes streaming, sharing and consuming content so easy across many different devices. In addition, it’s a brand that has great value with recognition that allows for them to be trusted and make users somewhat open to testing out a new service offering from Apple.